New Zealand's royal opportunity

Christopher Browne

Have you noticed how the property talk at parties is all about tropical island paradises and exotic coastal hideaways? Latin America, the Pacific Islands, South-East Asia - you name it, your fellow guests have either bought there or know people who have.

So what will be the next region to tantalise us? Try New Zealand. This land of 4·1 million residents has enjoyed 15 per cent annual capital growth for seven years and house prices have risen 172 per cent since 1990 - compared with 145 per cent in Britain. Tourism is booming, with 2·5 million visitors last year, boosted by winter and summer sports and the Lord Of The Rings effect.

However, it's the waterfront property boom in the South Island resort of Queenstown that's really attracting British investors, and with exemption from stamp duty or capital gains tax who can blame them? Take the Shore, a Wensley Group boutique-style apartment complex in Queenstown, overlooking Lake Wakatipu and surrounded by four ski slopes. Colliers CRE (020 7344 6675) is selling three- and four-bedroom apartments there for £320,000 and £580,000 respectively.

It's their "dual-key" status that appeals to investors, holiday owners and retirement couples. One bedroom is set aside as a hotel room with its own facilities and separate entrance (occupancy income is six per cent guaranteed for two years), while the rest of the apartment is for your own use. The average rent for a three-bedroom apartment is £230 a night in peak season and £173 in low season.

The Club development will offer 43 two- to four-bedroom apartments from £416,000 with terraces and lake views from next October, with fractional ownership of a jetboat thrown in.

"Most British visitors come for the skiing, which is catching up with Aspen," says Tim Marsh from Colliers, "although properties are a fraction of the price." The average cost for properties in Queenstown last year was £180,000, compared to Aspen's £1·2 million.

British investors Trevor and Julie Thorpe bought a split-level penthouse in The Shore and aim to use it as a family home. "We decided to buy when we were holidaying in Queenstown as we are very keen skiers," says Julie. "But the spectacular views and good local facilities have persuaded us to move here permanently in a few years' time - the hotel room will cover our outgoings until then."

Adam Gough of New Zealand property advisors Worldwide Solutions argues that lower air fares, cheaper transport and social changes in New Zealand have created strong demand for upmarket rental accommodation. "UK investors who get their figures right can expect returns of 6 to 8·5 per cent," he says. "The fashion for later marriages means people are renting for longer, while an influx of wealthy foreign students has pushed up demand and rent margins. New Zealand may be far from the UK, but investors can do very well on long-term buy-to-lets.